John Gormley (Dublin South East, Green Party)

For example, we have concentrated housing expenditure on social housing and protecting the most vulnerable. We are investing in environmental protection concerning water, waste management and the natural and built heritage. In addition, we have increased investment in the water services investment programme by a massive 19% in the interests of protecting public health, compliance with EU environment standards and supporting economic development. I will return to these issues in greater detail later.

Today, I am presenting the second annual carbon budget. When I introduced the concept last year, I explained the thinking that led to its inclusion in the Agreed Programme for Government. If climate change is to be central to Government policy-making, it must be integrated into the annual budgetary process. Our decisions on expenditure and taxation must be informed as much by the climate impact as by the financial and economic impacts.

Given the unprecedented financial backdrop to this year's budget, many might have expected climate considerations to receive little, if any, attention. That would have been a huge mistake. As Minister for the Environment, Heritage and Local Government and Leader of the Green Party, I have spoken in the House on many occasions about the environmental cost of our greenhouse gas emissions. In the context of today's debate, however, the focus must also be on their financial and economic cost. If we do not reduce our emissions, the long-term costs to the Exchequer and to the economy will be immense.

While the international negotiations on a post-Kyoto agreement have not yet concluded, we already know that Ireland will be required to reduce its emissions by 2020 to a level at least 20% below that of 2005, and probably by considerably more. As we stretch the time horizon towards 2050, the scientific consensus is that the cuts required of developed countries could be as much as 80% to 95%, if the worst effects of global warming are to be avoided.

These cuts will not be optional. They will be binding on Ireland under future EU and UN agreements and we will face hefty financial sanctions if we fail to meet them. We must, therefore, prepare the ground now for a major structural change in our economy and our society, so we can continue to develop and prosper while simultaneously reducing our greenhouse gas emissions. The Government has accepted this reality and has agreed a budget that is designed not just to restore financial stability, but also to move us further towards the necessary transition to a low-carbon economy.

I have circulated a short table which sets out the trend in Ireland's emissions, including the projections for the Kyoto period. The table includes provisional estimates of 2007 emissions, which have just been completed by the Environmental Protection Agency. The agency has done excellent work in completing its calculations two months earlier than planned. There was speculation in some media a few weeks ago that our emissions would be substantially up on the previous year, but that is not the case. The table shows a welcome fall of just over 1% in net emissions, taking account of increased sequestration though afforestation. Net emissions have fallen from 68.6 million tonnes of carbon dioxide equivalent in 2006 to 67.9 million tonnes in 2007. While the reduction in 2007 is welcome, it offers cold comfort in the context of the baseline trend for the Kyoto period. Over the past year, the Government has committed significant resources to improving the capacity to model and project emissions across the various sectors. This has enabled the EPA, with the support of relevant agencies in the various sectors, comprehensively to update projections for the Kyoto period, which were included in the national climate change strategy.

This analysis shows that, even after allowing for the implementation of the measures that have already been put in place by the Government, the baseline trend continues to rise. The most striking revision relates to transport emissions. The average level for the Kyoto period is, in advance of new measures, put at close to 2 million tonnes a year more than was projected last year. The downward trend in agriculture has also been reversed, as livestock numbers have begun to rise again.

There is a sizable fall in projected emissions in the residential sector, thanks in part to the energy efficiency measures that have been introduced in the past year, but this is overwhelmed by the baseline changes in transport and agriculture. The consequence, as shown in column D of the table, is that the Government is, in advance of new measures, projected to have a gap of 5 million tonnes a year. This must be bridged by a combination of further measures and purchasing credits under the flexible mechanisms of the Kyoto protocol.

The House is aware that, on coming into office last year, the Government established a Cabinet sub-committee on climate change and energy security, chaired by the Taoiseach. One of its main tasks has been to drive the cross-departmental effort to develop further measures to reduce emissions. The wider public sector is also contributing to this effort. Tomorrow, I will be speaking at a major conference on the way forward for local authorities in addressing climate change.

As a result of the work of the Cabinet sub-committee, this year's Estimates and budget process have given greater priority than ever before on the need for emission reductions, notwithstanding the emphasis that has inevitably been placed on financial stability in the particular circumstances of the time.

I now propose to draw together the key responses across various sectors. Some will deliver emission reductions in the short to medium term, and these are reflected in columns E and F of the table. However, the longer term is even more important. Real structural change cannot be achieved overnight, but we need to put the drivers in place if we are to get the benefit in future. Much of what I am outlining today will take time to deliver, including emission reductions, but in the long run they will have a significant effect.

One of the most effective ways of reducing our national greenhouse gas emissions is to generate as much electricity as possible from renewable sources rather than from fossil fuels. The previous Government adopted a target that 33% of electricity consumed would be from renewable sources by 2020. Today I can confirm that the Government has agreed, on the recommendation of my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Ryan, to increase this target to 40%.

See this speech in context